"Our family wealth is a brand," said Rich Graeter, CEO of the super-premium ice cream… more

Tom Uhlman | Courier

It’s the brave man who can say no to Walmart.

But that’s just what Rich Graeter did when the world’s largest retailer told him over the last three years it wanted to sell his iconic Cincinnati brand of ice cream in more than 4,600 U.S. store locations.

"Our family wealth is a brand," said Rich Graeter, CEO of the super-premium ice cream… more

Tom Uhlman | Courier

For Graeter, CEO of fast-expanding Graeter’s Manufacturing Co., Walmart’s fixation on low prices just didn’t fit with the vision for his unapologetically upscale product.

“They’re a fantastic retailer, they would be a great partner and we would sell plenty of ice cream with Walmart,” Graeter said. “But it doesn’t

align with our brand.”

That dedication to the brand is what has given Graeter’s ice cream its cult-like following. It’s also kept his company in business – hardly any family companies make it to the fourth generation of family ownership. Many that do often sacrifice what made them special in the first place.

Since 2007, when Graeter took the reins, he’s been able to expand rapidly without sacrificing the cachet Graeter’s has as one of the nation’s super-premium ice creams, known specifically for its creaminess and giant, chunky chocolate chips. When Graeter started working for the family business in 1989, it was a $5 million-a-year business. Today, the company is approaching $40 million in revenue.

‘... Then it kind of exploded’

A lot of the growth has come in recent years. In 2010, before its Bond Hill production facility opened, Graeter’s could crank out 315,000 gallons of ice cream. With the new plant, it has the capacity to produce 1 million gallons. Graeter expects to make up to 900,000 gallons of ice cream this year.

You can now pick up a pint at one of 8,000 locations across the United States. A little more than a year ago, Graeter’s was available in 7,200 stores.

There are plenty of stories about brands that had the prestige that Graeter’s has but lost it during expansion.

One example, said Tom Horwitz, senior vice president and partner with FRCH Design Worldwide, is premium doughnut maker Krispy Kreme. When the company started expanding outside the Southeast, it became ubiquitous.

The doughnut that was famous for its freshness could be picked up just about anywhere, but it wasn’t the same, hot-from-the-oven treat. Financial troubles, partly from legal issues and the recession, eventually led to the closure of more than half its stores.

“It exploded in growth ... then it kind of exploded,” Horwitz said.

Krispy Kreme is now working to rebuild that image and expand again in the U.S.

And here’s a Cincinnati example: Big Sky Bread Co. Started by brothers Roger and Barry Elkus in 1990, the company expanded to 40 locations in eight years, selling hearty breads and giant cookies. Instead of expanding regionally first, Big Sky Bread spread itself out across the nation, a bad strategy in retail, Horwitz said. It closed its last retail store in 2003.

Graeter’s has avoided both of those problems. It took a focused approach to expanding outside of the region. And the Graeter’s ice cream you buy at a Ralph’s in Los Angeles is exactly the same as the scoops you can pick up in Hyde Park.

“You have to assume there’s absolutely no change in quality,” Horwitz said.

In truth, Graeter said the quality of the ice cream improved with the move to the Bond Hill production facility. Processes that could be automated without sacrificing quality were, and the production is now better and faster.

“No. 1 is the product, the quality of the product,” Graeter said. “Everything we’ve done improves the quality of the product.”

Like the brand, the ice cream is protected along every step of the process. Once the ice cream is hand-packed (as it always has been) into containers, it takes a ride on a conveyor belt to a freezer. At the Bond Hill facility, specialized dock doors create a seal between the truck and the freezer so there’s no risk of a change in temperature damaging the product.

‘Too much of a good thing is a bad thing’

One thing that didn’t change was the way the ice cream is made, two gallons at a time. A secret recipe of cream and egg custard is swirled along the chilled sides of a spinning French pot freezer, and the ice cream is folded, preventing air from whipping into it.

“We couldn’t improve the French pot, so we didn’t,” Graeter said.

Plenty of advisers could come in and suggest ways to cut costs and boost sales for a short-term gain, said Dan Heimbrock, CEO of HyperDrive Interactive, which provides Graeter’s digital and word-of-mouth branding. But for a company that cherishes its brand and product as Graeter’s does, that was never an option.

“He’s so concerned about respecting the purity and integrity of that homemade recipe,” Heimbrock said.

But back to saying no to Walmart. It wasn’t just that the brands didn’t match up, even though that played a significant part in the decision.

Loyalty to the retailer that helped Graeter’s expand across the nation, Kroger Co., also played a role in the decision. Graeter’s is available in more than 1,400 Kroger locations.

Graeter said he’d be undercutting his company by selling in Walmart stores and undercutting “the partner that brought us to the party” in Kroger, Walmart’s top grocery competitor.

“Too much of a good thing is a bad thing,” he said.

Graeter considers himself and other family members custodians of the brand for this generation, with an obligation to pass it along to the next generation a little bit better than when it was given to them.

“Our family wealth is a brand,” Graeter said. “If we protect that brand, it will take care of us.”